UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 001-35238

HORIZON THERAPEUTICS PUBLIC LIMITED COMPANY

(Exact name of registrant as specified in its charter)

Ireland	Not Applicable
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
70 Saint Stephen’s Green Dublin 2, D02 E2X4, Ireland	Not Applicable
(Address of principal executive offices)	(Zip Code)

011 353 1 772 2100

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Ordinary shares, nominal value $0.0001 per share	HZNP	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company,’’ and ‘‘emerging growth company’’ in Rule 12b–2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Number of registrant’s ordinary shares, nominal value $0.0001, outstanding as of October 28, 2021: 226,821,014. 

HORIZON THERAPEUTICS PLC

INDEX

		Page
		No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of September 30, 2021 and as of December 31, 2020 (Unaudited)	1
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2021 and 2020 (Unaudited)	2
	Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 (Unaudited)	5
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	57
Item 4.	Controls and Procedures	58
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	59
Item 1A.	Risk Factors	59
Item 6.	Exhibits	115
	Signatures	117

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HORIZON THERAPEUTICS PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(In thousands, except nominal value and share data)

	As of			As of
	September 30,			December 31,
	2021			2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,068,547		$	2,079,906
Restricted cash		3,839			3,573
Accounts receivable, net		775,371			659,701
Inventories, net		237,434			75,283
Prepaid expenses and other current assets		328,730			251,945
Total current assets		2,413,921			3,070,408
Property, plant and equipment, net		285,837			189,037
Developed technology and other intangible assets, net		3,051,135			1,782,962
In-process research and development		880,000			—
Goodwill		1,069,031			413,669
Deferred tax assets, net		782,852			560,841
Other assets		125,912			55,699
Total assets	$	8,608,688		$	6,072,616
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	50,724		$	37,710
Accrued expenses and other current liabilities		483,833			485,567
Accrued trade discounts and rebates		303,486			352,463
Long-term debt—current portion		16,000			—
Total current liabilities		854,043			875,740
LONG-TERM LIABILITIES:
Long-term debt, net		2,557,864			1,003,379
Deferred tax liabilities, net		591,552			66,474
Other long-term liabilities		155,015			101,672
Total long-term liabilities		3,304,431			1,171,525
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Ordinary shares, $0.0001 nominal value; 600,000,000 shares authorized at September 30, 2021 and December 31, 2020; 227,026,047 and 221,721,674 shares issued at September 30, 2021 and December 31, 2020, respectively, and 226,641,681 and 221,337,308 shares outstanding at September 30, 2021 and December 31, 2020, respectively		22			22
Treasury stock, 384,366 ordinary shares at September 30, 2021 and December 31, 2020		(4,585	)		(4,585	)
Additional paid-in capital		4,310,886			4,245,945
Accumulated other comprehensive loss		(1,532	)		(145	)
Retained earnings (accumulated deficit)		145,423			(215,886	)
Total shareholders’ equity		4,450,214			4,025,351
Total liabilities and shareholders' equity	$	8,608,688		$	6,072,616

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

HORIZON THERAPEUTICS PLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(In thousands, except share and per share data)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2021			2020			2021			2020
Net sales	$	1,036,992		$	636,427		$	2,211,946		$	1,455,115
Cost of goods sold		251,640			151,475			553,003			370,406
Gross profit		785,352			484,952			1,658,943			1,084,709
OPERATING EXPENSES:
Research and development		93,549			30,206			291,076			138,483
Selling, general and administrative		360,260			226,164			1,047,456			696,271
Impairment of long-lived asset		—			—			12,371			—
Gain on sale of asset		—			—			(2,000	)		—
Total operating expenses		453,809			256,370			1,348,903			834,754
Operating income		331,543			228,582			310,040			249,955
OTHER EXPENSE, NET:
Interest expense, net		(22,977	)		(12,185	)		(59,018	)		(48,100	)
Foreign exchange (loss) gain		(476	)		(753	)		(1,363	)		306
Loss on debt extinguishment		—			(14,602	)		—			(31,856	)
Other (expense) income, net		(849	)		717			2,113			1,791
Total other expense, net		(24,302	)		(26,823	)		(58,268	)		(77,859	)
Income before benefit for income taxes		307,241			201,759			251,772			172,096
Benefit for income taxes		(19,302	)		(91,081	)		(109,537	)		(27,143	)
Net income	$	326,543		$	292,840		$	361,309		$	199,239
Net income per ordinary share—basic	$	1.44		$	1.38		$	1.61		$	1.00
Weighted average ordinary shares outstanding—basic		226,096,747			212,320,219			225,053,704			198,413,779
Net income per ordinary share—diluted	$	1.38		$	1.31		$	1.54		$	0.95
Weighted average ordinary shares outstanding—diluted		236,198,789			223,743,903			235,256,424			208,678,460
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX
Foreign currency translation adjustments	$	(514	)	$	858		$	(1,100	)	$	877
Pension remeasurements		—			—			(287	)		—
Other comprehensive (loss) income		(514	)		858			(1,387	)		877
Comprehensive income	$	326,029		$	293,698		$	359,922		$	200,116

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

HORIZON THERAPEUTICS PLC

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

(In thousands, except share data)

										Additional			Accumulated Other			Retained Earnings			Total
	Ordinary Shares				Treasury Stock					Paid-in			Comprehensive			(Accumulated			Shareholders’
	Shares		Amount		Shares		Amount			Capital			Loss			Deficit)			Equity
Balances at December 31, 2020		221,721,674	$	22		384,366	$	(4,585	)	$	4,245,945		$	(145	)	$	(215,886	)	$	4,025,351
Issuance of ordinary shares in conjunction with the exercise of stock options and the vesting of restricted stock and performance stock units		3,305,947		—		—		—			19,843			—			—			19,843
Ordinary shares withheld for payment of employees’ withholding tax liability		—		—		—		—			(128,261	)		—			—			(128,261	)
Share-based compensation		—		—		—		—			62,296			—			—			62,296
Currency translation adjustment		—		—		—		—			—			(821	)		—			(821	)
Pension remeasurements		—		—		—		—			—			(287	)		—			(287	)
Net loss		—		—		—		—			—			—			(123,351	)		(123,351	)
Balances at March 31, 2021		225,027,621	$	22		384,366	$	(4,585	)	$	4,199,823		$	(1,253	)	$	(339,237	)	$	3,854,770
Issuance of ordinary shares in conjunction with the exercise of stock options and the vesting of restricted stock and performance stock units		597,169		—		—		—			7,996			—			—			7,996
Issuance of ordinary shares in conjunction with Employee Share Purchase Plan		474,997		—		—		—			11,482			—			—			11,482
Ordinary shares withheld for payment of employees’ withholding tax liability		—		—		—		—			(13,388	)		—			—			(13,388	)
Share-based compensation		—		—		—		—			54,424			—			—			54,424
Currency translation adjustment		—		—		—		—			—			235			—			235
Net income		—		—		—		—			—			—			158,117			158,117
Balances at June 30, 2021		226,099,787	$	22		384,366	$	(4,585	)	$	4,260,337		$	(1,018	)	$	(181,120	)	$	4,073,636
Issuance of ordinary shares in conjunction with the exercise of stock options and the vesting of restricted stock and performance stock units		926,260		—		—		—			12,173			—			—			12,173
Ordinary shares withheld for payment of employees’ withholding tax liability		—		—		—		—			(16,428	)		—			—			(16,428	)
Share-based compensation		—		—		—		—			54,804			—			—			54,804
Currency translation adjustment		—		—		—		—			—			(514	)		—			(514	)
Net income		—		—		—		—			—			—			326,543			326,543
Balances at September 30, 2021		227,026,047	$	22		384,366	$	(4,585	)	$	4,310,886		$	(1,532	)	$	145,423		$	4,450,214

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

HORIZON THERAPEUTI